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How to Increase Employees' Intrinsic Goodwill

Everyone comes to the table with some amount of “altruistic capital,” a stock of intrinsic desire to serve, says Harvard Business School professor Nava Ashraf. The key for leaders is figuring out how to increase it — and how to avoid depleting it. Ashraf developed the concept while conducting extensive field work in Zambia, including a program that employs hairdressers to sell female condoms and provide HIV/AIDS education in their salons. She discusses her international research in this article by Carmen Nobel, which first appeared on the HBS Working Knowledge website.

“Work done in the spirit of service is the highest form of worship.” —Abdu’l-Bahá

The field of economics is rife with the concept of “capital.” There’s financial capital—cold hard cash or cashable assets. There’s fixed capital—the buildings, machines, and factories that enable productivity. There’s human capital, which measures the economic value of an employee’s skill set and intellect.

And now there’s a new member of the capital lexicon: altruistic capital.

“Altruistic capital is the idea that every individual has within them an intrinsic desire to serve,” explains Nava Ashraf, an associate professor in the Negotiation, Organizations & Markets Unit at Harvard Business School. “In an organization, all the employees already have some of this, in varying degrees.”

A behavioral economist, Ashraf developed the idea of altruistic capital while conducting experimental field research for various global nonprofit organizations. But she believes that her findings on the subject will yield important lessons for the private sector, as well. “As a manager, how you organize the work, and how you incentivize, can increase or deplete the amount of altruistic capital.”

Ashraf’s interest in international field research sprouted from the realization that the people tasked with solving global problems aren’t always in touch with the reality on the ground.

During a summer at the World Bank, she worked on Moroccan agricultural policy with a team of consultants. “I was just an intern,” Ashraf says, “but as I looked around the boardroom I realized that not one of these people had ever actually talked to a farmer in Morocco. And yet they were designing a rural development strategy for the whole country.”

Suspecting she could help people better if she actually met them, Ashraf sought out field research volunteer opportunities, packed her bags, and flew to the Ivory Coast (where she helped found the Rural Women’s Training Institute in 1998).

“What I realized was that everything I had previously learned about development seemed to be conflicting with what I was seeing in the field,” she says. “I kept seeing situations in which people might seem to have access to various supplies and technologies, but they weren’t able to take advantage of them for numerous reasons. It felt to me like a tragic situation that potentially could be solved with a bit more insight into how people actually make decisions, the structure of their constraints, and what really affects their behavior.”

Thus launched an academic career in which Ashraf challenges (and sometimes disproves) popular economic theory with field experiments. “Field experiments give you scientific rigor while being close to practice,” says. “Unless you really have a bulletproof argument that you can’t poke holes in, it’s hard to change prior beliefs.”

Case in point is her research on performance incentives.

The power of measuring social impact

Historically, economists and firms alike have banked on the theory that workers are motivated by earning financial incentives and boosting revenues. And in designing development projects for developing countries, nonprofit organizations tend to follow this theory, too.

“This is the traditional private-sector approach,” Ashraf says. “The assumption is that if you don’t give someone a stake in the profits of the organization they won’t feel that they have a mission.”

The practical problem with the theory is that many organizations, such as social service agencies, simply can’t afford to motivate their staff with monetary bonuses. Moreover, a growing body of research indicates that corporate workers are very motivated by nonmonetary incentives, such as positive recognition from their peers. (See, for example, The Most Powerful Workplace Motivator.) Ashraf speculated that organizations could motivate employees simply by showing them how their work helped others—in other words, by harnessing and increasing their altruistic capital.

Hairdressers in Zambia were recruited to educate their customers on HIV/AIDS prevention.

In December 2009, the Society for Family Health (SFH), an affiliate of Population Services International in Lusaka, Zambia, agreed to collaborate on a field experiment with Ashraf and two colleagues, Oriana Bandiera of the London School of Economics and Kelsey Jack of Tufts University. SFH had established a new program in which hairdressers provided HIV/AIDS education and sold female condoms at subsidized prices in their salons. The AIDS epidemic is especially dire in Zambia, where some 14.3 percent of adults (ages 15-49) were infected with HIV in 2010, according to government data. And HIV/AIDS is spreading fastest among married heterosexual couples.

Ashraf explains that hairdressers were ideal educators and distributors for three key reasons: One, they tend to have unusually familiar relationships with their clients, whom they see repeatedly throughout the year. Two, a client sitting still for a haircut is a captive audience. Three, while there is a dearth of health officials in Zambia (the entire nation employs only 6,000 nurses), there is an abundance of hairdressers: a 2010 census by the research team found more than 2,500 salons in Greater Lusaka, serving a population of about 2 million. The team aimed to suss out the best way to incentivize hairdressers to distribute female condoms, which, barring abstinence, are the best-known way for women to protect themselves from HIV.

The researchers randomly chose a sample of 1,222 stylists (who were unaware of the experiment) and divided them into four incentive groups. The control group received no incentives at all; the hairdressers were purely volunteers. The small financial margin group received a 10 percent margin (50 kwacha) over the retail price for every condom pack sold. The large financial margin group received a 90 percent margin (450 kwacha) over the retail price.

In the nonfinancial reward group, each stylist received a large paper thermometer, like those often used in fundraising campaigns, to hang in her salon. Each condom sale garnered a star stamped on the thermometer, providing a visual measure of the stylist’s contribution to AIDS prevention in her community. Hairdressers who sold more than 216 condom packs during the yearlong study period were invited to an awards ceremony, along with five guests of their choosing, where they would be congratulated by a well-known Zambian health official.

On average, the nonfinancial reward group sold twice as many condoms as hairdressers in the other groups. Ashraf notes that many stylists continued to work just as hard even when it was clear that they would not reach the awards ceremony threshold within the time period.

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